The way I see it, after Waltz Dukat was no longer crazy. He was just (mostly) done deluding himself that he was one of the good guys the whole time, and that the universe was conspiring against him. Sisko made him face the fact that he was, in fact, evil, no matter what he told himself and others his intentions were. He could have redeemed himself at that point, but he chose to embrace it instead

Now, whether that was good for the character or not is debatable, and not everyone's going to like any change, let alone that one.